Nairobi, Kenya 6, November 2012: Stakeholders in the Kenya plastic
money industry including MasterCard, regional card processor Paynet
and global security printer De La Rue have launched a campaign in
Nairobi dubbed “the great migration to EMV”. The campaign aims at
encouraging Kenyan banks to abandon the old magnetic stripe platform
used for ATM, credit and debit cards and instead issue their customers
with new high security, multifunction chip and pin cards.
The move by the stakeholders, witnessed by officials from Kenya’s
Central Bank, has been praised as the first joint effort by card
networks and technology providers in the region to respond to the
heavy losses incurred by banks and merchants through card fraud in the
country.
A recent report by Deloitte on fraud in the financial sector estimated
the losses by various East African banks at over Ksh 4.06 billion
since 2011 to the first quarter of 2012. But stakeholders expressed
fear that the amount lost by banks to card counterfeiters and skimmers
in the region may actually be higher due to a high number of
unreported fraud cases, with some banks reportedly concealing their
ordeals to protect their image.
“The risk of loss through card fraud is growing every day, more so
because of the rising preference for plastic money payments by the
banked in the region. Moving this kind of money on cards is attractive
to cyber fraudsters, especially when magnetic stripe cards are used,
which is why we are urging banks to move to the chip and pin platform
to outsmart them,” said Bernard Matthewman, Paynet group CEO.
According to the Central Bank of Kenya data, the number of debit cards
issued had grown nearly 15 per cent to 8.1 million cards. Card
payments have rose by a significant 83 per cent to Ksh386.6 billion
from Ksh211.2 billion during the first half of 2012. “This growth
should serve to remind senior bankers of the urgency to migrate to
chip and pin to ensure a secure card commerce environment,” Mr
Matthewman added.
Stakeholders told bankers that in spite of the technology newness to
East Africa, the right investments were in place to ensure a
cost-effective migration to chip and pin cards by banks.
Paynet, for instance, has a fully functional Visa and MasterCard chip
and pin card issuing and processing platform which offer banks a
seamless and low cost way to upgrade old cards issued to customers
while De La Rue has advertised local capacity to provide chip and pin
card personalization services for banks. The two joined international
card payment association Europay, MasterCard and Visa, referred
globally to as EMV, in championing the new card platform in the
region.
Speaking during the campaign launch, at a bankers breakfast event in a
Nairobi hotel, MasterCard said Kenya had the opportunity to take a
leap forward by adopting higher card security technologies that match
up to the region’s reputation for innovation and use of advanced
technologies to improve life. “From an analysis of global trends, the
region is lagging behind and along the way missing on an opportunity
for continental leadership,” said MasterCard East Africa’s James
Wainaina. Nearly 70% of Europe’s financial institutions and merchants
have migrated to EMV chip and pin platforms while the Americas are
fast taking up EMV chip and pin technology. “Chip and pin technology
enhances the security of payment systems and provides better
protection to issuers and acquirers against fraud as compared with
traditional magnetic stripe cards and devices. It also enables a wider
range of value-added solutions to bring about unprecedented
opportunities to strengthen customer acquisition, drive revenue
through increased card usage and new card acceptance opportunities,”
he added.
Mr. Wainaina said East Africa had the chance to ensure that it did not
suffer the brunt of migrating fraudsters.
Magnetic stripe cards have been in use in East Africa by banks and
merchants for nearly 20 years, and even longer in other parts of the
world. Experts says that the technology in now highly susceptible to
skimming and counterfeiting, which happens when a card is swiped
through a magnetic stripe reader to record the information needed to
use the card for payment. This stolen data can be written to another
magnetic stripe card, effectively creating a duplicate that can be
swiped to make a fraudulent purchase at an unsuspecting merchant.
De La Rue anticipates that chip and pin cards technology will
drastically cut fraud in the region. “The new cards use a
microprocessor installed in a chip embedded on the cards. This
contains coded information needed to authorize payment through a
multitude of protection features that makes it significantly more
secure than a traditional magnetic stripe card,” said Scott Atkins,
Head of Sales at the company.
The stakeholders disclosed that international card networks Visa and
MasterCard had already instituted “structural measures” to motivate
banks and merchants in the region to migrate to the more secure
platform.
The fraud liability shift structures will adversely affect banks that
hold on to the weak security magnetic stripe cards. “This is one way
that card providers are sending the message out. The industry is
coming together to urge the region to move to this more secure card
platform to enjoy benefits of a much secure payments space,” said Mr.
Matthewman.